California investor sees promise in Ypsilanti real estate market, purchases apartment complex
Is the Ypsilanti Township area one of the best real estate markets in the country?
According to a California real estate investment company, the answer is yes.
San Diego-based Coseo Properties Inc. recently bought the Country Meadows Apartments for $5.9 million with the intentions of upgrading and flipping the complex in around five years.
In a news release, the company called Ypsilanti “currently one of the more attractive secondary markets for real estate investment in the nation.”
Country Meadows is the fifth complex Coseo has bought in metro Detroit in the past six months, and the company’s vice president, Calvin Coseo, said it intends to buy five to 10 more buildings in the region over the next 18 months. Those buildings will be fixed and flipped as well, he said.
Coseo Properties recently purchased Ypsilanti Township's Country Meadows for $5.9 million.
Tom Perkins | For AnnArbor.com
“Our goal is to scoop anything that makes sense like this over the next year, next two years, then sell them in year five,” Coseo said.
Coseo Properties also owns 700 homes in metro Detroit and has converted 131 into rental units, but Coseo said it makes far more sense for the company to own 200 units in one central complex.
Country Meadows was formerly Tuscan Creek Apartments, and is located on Congress Street just east of Hewitt Road. The property was sold to Coseo by Erie Investments, which recently purchased River’s Edge Apartments off LeForge Road near Eastern Michigan University’s campus with the intention of upgrading the complex and rebranding it as student housing.
The complex came at a bargain because the seller was distressed and over-leveraged, Coseo said.
Erie had invested around $3 million in fixing up Country Meadows and there is very little in the way of deferred maintenance. Among improvements were the installation of new windows, siding, roofs, entry doors, lighting, hallway carpeting and air conditioning units. Improvements also included exterior fencing, street paving, lighting, storm sewers and landscaping.
As further improvements are made, the price of rent would go from an average of around 70 cents a square foot to $1 a square foot, Coseo said.
Country Meadows was constructed in 1975 and is composed of eight three-story buildings on a 30-acre site. Units range in size from 620-square-foot one-bedroom apartments to 750-square-foot two-bedroom apartments.
The complex’s occupancy rate is artificially high because Erie was preparing to sell the complex, Coseo said, so many of the rent prices are significantly lower than what they should be. Coseo said tenants will be asked to reapply when their leases expire and rent prices will slowly come in line with the market average.
“Slowly but surely we will up the tenant profile,” Coseo said.
He added that the company has a strong management team and can reduce the number of employees working at the property, which will find more savings on the complex.
According to a company news release, Coseo Properties has acquired, rehabilitated, leased and successfully sold nearly 3,000 single-family homes in the past three years. It is continuing to shift its focus toward apartment buildings.
Coseo said Michigan, where several generations of Coeos previously resided, hit its low and is starting to rebound. He said he expects the region's real estate market to continue to improve in the coming years, which is why the company plans to sell the property in five years.
“Five years won’t be the height of the highs, but it will be a good time to get out,” he said. “Hopefully we’ll have a good product, all sexy, ready to go and pretty easy to sell.”
Comments
Mike OL
Mon, Jul 23, 2012 : 6:49 p.m.
I find Ron's comments interesting. The property next door to Country Meadows, The Meadows, was bought by a local investor when a CA investor lost it back to the bank 12 years ago. It has been fully occupied and a strong performer ever since. Still has the same local owner. The three properties he is referring to on LeForge have been owned by a CA investor for the last 4 and 1/2 years. All were lost back to the lender's in the last year and are now owned locally and are being rehabb'ed with local money. The comments by the new owner that the property(Country Meadows) was over leveraged are false. In fact the debt load on the property was about 50%. The rest was equity. The quoted rents per sq. ft. were also incorrect. We have seen a lot of CA "experts" come and go in the Ypsilanti market. Time will tell.
15crown00
Sun, Jul 22, 2012 : 2:15 a.m.
well they are from the left coast.What do you EXPECT?
Ron
Sat, Jul 21, 2012 : 12:31 p.m.
I don't disagree with most of what everybody here is saying but try to look at it this way. The monster complex at the end of Grove Rd near Rawsonville Rd. Or yet, how about the small complex that is right next door to Country Meadows Entrance? The troubled Complexes over on LeForge? Are these properties owned by Local Companies or companies out of State? I really think that this investment company coming in from California will help with bring the standards up and maybe show the other owners that it can be done the way it should be. Yeah the rent may be higher but that's the price you pay to have something nice and to call home. It will also bring more tax money into the township right?
lefty48197
Sat, Jul 21, 2012 : 7:32 p.m.
It sounds like the Ypsi Township government is determined to demolish the Grove rd. Property. Apparently they just don't have the vision or spirit that private investors do!
JRW
Sat, Jul 21, 2012 : 12:34 a.m.
Good idea. Make what is currently affordable housing into upmarket, overpriced housing, forcing out those undesirables who are working for low wages or are students working their way through school. One more example of greed. Keep it up! More folks on the streets!
Ben Petiprin
Fri, Jul 20, 2012 : 8:20 p.m.
Carpetbaggers!
Suzanne
Fri, Jul 20, 2012 : 7:44 p.m.
Obviously, he hasn't been reading the crime reports...
r756
Fri, Jul 20, 2012 : 6:59 p.m.
Will someone please send them the listing for Water Street?
jns131
Fri, Jul 20, 2012 : 6:33 p.m.
Here is the worse part yet. If anything goes wrong? We on the township board are going to have get the twp attorney to get an injunction to either clean up or tear down the place. I wish investors would be living in Michigan instead of on the other side of the nation. So sad to see another great place go by the wayside. More taxes for us because investors think they are making money when they are not.
say it plain
Fri, Jul 20, 2012 : 4:49 p.m.
Anything decently located for colleges especially, and for businesses also, that is selling for cheap, will be scooped up by investors like this one; no surprise. Folks who live on the edge of poverty will have to move even farther away from half-way decent jobs, and those who land the jobs being created locally at the 'new-reality' lowered salaries offered by corporations these days will move into the 'newly refurbished and recently flipped' housing, pay the higher rents that eat up more of their ability to provide for their families, and the real money will keep on going to the investor classes. Cute that in this case, and in others recently around here, the investor class reps aren't even close to local! We see Texas and Georgia or whatever (which rich southern family scion of the exterminator business is developing that monstrosity housing out on the Grace Bible Church land? I forget) developers in Ann Arbor, Cali's coming to Ypsi.... At least out in those warmer lands there is a 'growth industry' of butlering and maiding and nannying for the investor classes left to the rest of us! Here, not so much!
Some Guy in 734
Fri, Jul 20, 2012 : 4:32 p.m.
Am I the only person who finds "Slowly but surely we will up the tenant profile" to sound more than a little sinister? From what I know of Country Meadows, you don't live there if you can afford to pay half again as much in rent. When I take the bus into work, a number of the people I see boarding at the stop there are going to service jobs in Ann Arbor. If they get priced out, it's not just an issue for Ypsi--it's going to directly affect you lot over there in Allen-Rumseyville.
Heather
Fri, Jul 20, 2012 : 2:41 p.m.
I agree with Calvin Coseo's view. Ypsilanti is a great place to buy real estate now. I'm sorry that Erie Investments got overextended and had to sell at a loss, but I'm really happy about Coseo's plans. The apartments he just bought are on 30 very attractive acres. He should do very well with his plans for those buildings. The property really just needed someone with Coseo's vision. This is very good news!
Lynn Liston
Fri, Jul 20, 2012 : 2:28 p.m.
As a professional home-finder for corporate transferees, I agree with his analysis of the market. The area from Detroit to Chelsea, Brighton to Saline is really one large market with very consistent rates for similar properties. $1 a foot is becoming the minimum rate for housing in this market and $1.50/foot is the norm for more upscale properties outside of Ann Arbor's city center. Inside the city center, anything goes and it's a landlord's market. Our region is improving its economy and corporations are bringing in experienced staff and investing in local factories and development centers, so I can see Ypsi Township becoming an attractive place for rental properties over the next few years.
jondhall
Fri, Jul 20, 2012 : 1:42 p.m.
Smart investors buy low ... Sell HIGH
xmo
Fri, Jul 20, 2012 : 1:23 p.m.
I wonder why Coseco Properties thinks its a good investment? After all, Ypsilanti is the Affordable housing place for Ann Arbor! I guess they are not too impressed with the present occupants! ""Slowly but surely we will up the tenant profile," Coseo said. "
Pickforddick
Fri, Jul 20, 2012 : 12:35 p.m.
I do not think I would invest in Coseo
brian
Fri, Jul 20, 2012 : 12:27 p.m.
Ha, good luck.
Linda Peck
Fri, Jul 20, 2012 : 12:15 p.m.
This may work to uplift quality of housing in Ypsilanti and contribute stability in the real estate market there, thereby stimulating the economy. When FMC gets a grip on futuristic automobiles, Ypsi could become a very attractive home base for its new employees.
greg, too
Fri, Jul 20, 2012 : 4:25 p.m.
Futuristic? They can't even get the old school ones to work (see recall of 2013 Escapes yesterday). And Ford isn't gonna go anywhere near anywhere in Michigan to build a new factory. It's all going south and west to the sun belt.
Fester
Fri, Jul 20, 2012 : 12:12 p.m.
Flint, Detroit, Ypsilanti and Ypsilanti Township, just one big city.
Basic Bob
Fri, Jul 20, 2012 : 6:12 p.m.
Aren't we special?
thehawk
Fri, Jul 20, 2012 : 11:24 a.m.
Great! More overpriced apartments! Rent in this area is already ridiculous.